Economic Update September 2021
Summary
COVID caution
Many advanced economies are close to ‘peak rebound’ from pandemic driven recessions, with the tailwinds of expansionary fiscal and monetary policy set to fade and supply constraints posing a headwind to future growth. Equity markets
remain cautiously optimistic, but bond markets are more circumspect. The rapid spread of the Delta variant poses downside risks to the outlook, with even highly-vaccinated countries being severely impacted.
G4 CENTRAL BANK BALANCE SHEETS
Peak QE is coming but how to unwind?

Source: IFM Investors, US Federal Reserve, BoJ,
BoE, ECB, Macrobond. As at 1/9/2021
The G4 economies (US, UK, Japan, Eurozone) alone have added US$9 trillion to their balance sheets over the course of the pandemic, equivalent to 130% of their combined GDP. How this is unwound and the impact it will have on economies and markets
is likely to shape prospects in the coming year. However, any increase in policy rates is still a long way off in the US – likely in late 2022 or into 2023.
Australia has again been hit by significant restrictions on activity to address the spread of the highly transmissible Delta variant. Fortunately, June quarter GDP came in better than expected and demonstrated the momentum the economy had leading
into the current lockdowns. Should economic restrictions be lifted in the fourth quarter, it appears a technical recession (using the narrow definition of two consecutive quarters of negative growth) will be avoided.
About the author
Chief Economist
Alex Joiner, PhD
Joined in 2016
Alex Joiner is Chief Economist at IFM Investors. He is responsible for the firm’s economic, financial market and geopolitical risk analysis that is key in IFM’s investment process. In this capacity he engages with IFM’s domestic and global clients on macro-investment trends and themes. He is a frequent commentator on economic and markets via traditional and social media and regularly speaks at public forums and conferences. He has over two decades of professional experience in economic and markets and prior to joining IFM was the Chief Economist at Bank of America Merrill Lynch (Australian & New Zealand) after being a senior economist at ANZ Bank. He holds a First Class honours degree in Economics and a PhD in Econometrics from Monash University. Alex is also committee member of the Australian Business Economists.
About the author
Economist
Frans van den Bogaerde, CFA
Joined in 2019
Frans supports the Chief Economist with the firm’s economic, financial market, and policy analysis and forecasting. He holds a Bachelor of Commerce (Finance & Economics) with Honours in Finance (First Class) from the University of Melbourne. Prior to joining IFM Investors Frans was undertaking his Honours degree and was a researcher with the Brain Mind and Markets Lab at the University of Melbourne.